Corporations find business case for going green

The same logic applies to corporate efforts to push regulation of carbon emissions, which many say are a key driver of global warming.

By now, it seems inevitable that big businesses will eventually face some sort of U.S. regulation, so clearly there is an incentive for corporations to be involved in how those regulations are crafted. For those that have already taken action to reduce such emissions, there’s also a big incentive to get credit for what they have already done voluntarily.

Some big businesses are calling for a system dubbed “cap and trade,” in which companies that beat emission targets can essentially sell pollution credits to more egregious polluters who don’t meet the standards. Such a free-market system could prove lucrative for companies that employ the right strategy.

One alternative to cap and trade would be an outright tax on all carbon emissions. Supporters of that idea say it would force costs directly onto almost all carbon emitters, perhaps pushing them to move more quickly to find cleaner alternatives or cut energy use.

The trend toward going green is extending beyond the most obvious polluters, and reaching companies ranging from big Wall Street firms to technology mainstays.

“Whether for altruistic reasons or not, (companies) realize that our sort of 19th-century energy economy that we are currently running on is coming to an end,” says Josh Dorner, spokesman for the Sierra Club. “It’s to their advantage — to their business advantage — to start gearing up for a low-carbon economy.”

The Goldman Sachs Group has invested more than $1.5 billion in alternative and clean energy including solar and wind power, and also is establishing a business dealing in carbon-emission credits. A “cap and trade” system similar to what U.S. companies are proposing is already in place in Europe, and a voluntary trading system has been set up in the United States.

Golman Sachs also is now applying environmental criteria when deciding whether to approve a loan or underwrite a transaction, and it has developed a business giving institutional investors information about companies' environmental and social practices.

"We’re proud of the environmental things we can accomplish, but we’re also, I think, being smart business people," said Mark Tercek, head of Goldman Sachs' office of corporate citizenship.

Electronics makers including Dell and Hewlett-Packard are encouraging more recycling amid mounting concerns about the environmental effects of dumping electronics — and their accompanying toxic chemicals — into landfills. HP’s Tiernan said part of his company’s motivation is an expectation that regulations on electronics recycling and disposal will become more stringent.

In some cases, HP charges for shipping and handling of recyclables. The company also sees some benefit from reusing plastics and other products that it recycles.

HP and other companies also are seeing increasing interest in products that can save their customers money. Dell’s Web site keeps a running tally of estimated carbon emissions avoided — and money saved by customers — because of its improved technology.

Strange bedfellows
Environmental groups, some of which have been enlisted to help corporations achieve their new goals, admit that it can be a bit strange to work with companies who have been — and in some cases still are — their opponents in other areas.

BP has pledged to spend $8 billion over 10 years to develop a profitable alternative fuels business, among a host of other environmental initiatives. But the British company also has come under fire for leaky pipes and lax maintenance at its giant Prudhoe Bay oil field in Alaska and for a deadly explosion at a Texas refinery.

DuPont is often mentioned as one of the most aggressive companies tackling environmental issues, having effectively reinvented its practices since about 1990. But the company also is embroiled in several disputes with environmental regulators, and continues to produce some products environmentalists would prefer not to see, such as insecticides.

Wal-Mart continues to build Supercenters the size of several football fields, surrounded by massive parking lots. But the world’s largest retailer also has pledged major energy-saving initiatives over the next few years, and is pushing its environmental agenda onto its massive chain of suppliers. Wal-Mart’s potential clout is so great, in fact, that Environmental Defense recently put an office in the company’s hometown of Bentonville, Ark.

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